Home equity rises in Southwest Florida

But it remains No. 16 in the nation, with 26% of all homes with mortgages worth less than their loans, according to RealtyTrac

By JOSH SALMAN

A sharp rise in home prices during the past three years has helped more mortgage borrowers in Southwest Florida regain a stable financial footing.

Despite that progress, however, a new report from RealtyTrac Inc. shows that the number of homeowners in the region who owe more on a loan than their house is worth still ranks among the worst in the nation.

The new measure of equity in Southwest Florida shows just how far values slid during the housing slump. Although most industry observers expect the rebound to continue, it could take several more years and hundreds of new foreclosures before household equity returns to a level considered normal.

The lingering equity woes have squandered movement in the housing market, keeping inventory low by preventing many recession-battered borrowers from listing a home and buying another.

Local agents are mixed on its magnitude.

"We're getting to the point where a lot of people are at break even, or even though they're not underwater on a loan, the house is still worth less than they paid," said Marcus Vanzant, broker and owner of Marcus & Co. Realty in Manatee County. "Those who purchased from 2004 to 2006 are in a position where they understand they'll never see that equity again."

An estimated 30,633 mortgage holders in the North Port-Sarasota-Bradenton area -- about 12 percent of the region's active home loans -- regained positive equity in their residences from the start of April through June, according to the data released Wednesday by RealtyTrac.

But another 66,576 borrowers in the region remain seriously underwater.

Only 15 other U.S. metro areas had a negative equity ratio during the second quarter that was higher than Southwest Florida's 26 percent.

The report considers a property seriously underwater when the combined loan amount secured by the home is at least 25 percent higher than the property's estimated value.

Some are equity rich

On the flip side, 47,652 borrowers -- or 19 percent of the area's total -- are now considered equity rich.

Those homeowners are paying mortgages that carry a loan-to-value ratio of 50 percent or lower.

The more equity homeowners have in their property, the less risk they could slip into foreclosure. Tens of thousands of area residents battled foreclosures through the downturn, causing property values to plummet and leaving empty homes sitting vacant.

But values are increasing even of homes in foreclosure.

A quarter of Southwest Florida's pending defaults now have at least some positive equity. Even though the owners of these delinquent homes can't pay their bills, the distressed properties are worth more than the loans against them, enhancing the possibility of a short sale.

Negative equity was considered one of the leading factors causing a lack of homes for sale, with borrowers who were current on their payments but underwater on the loan largely unable to sell.

Problem overstated?

But now some agents in the region say the issue is overstated.

"It's just not a major problem anymore," said Gloria Weed, managing broker of the Michael Saunders & Co. brokerage in Lakewood Ranch. "I'm just not hearing a lot of it from my agents and clients. For those that wanted to get out, a lot of them found a way."

Across the state, almost 1.7 million Floridians are seriously underwater on their loans. That represents 30 percent of the state's mortgage borrowers. Only Nevada had a greater share, at 32 percent.

Lakeland had the nation's worst second-quarter equity rate, at 37 percent, followed by Las Vegas and Cleveland, both at 35 percent.

Tampa-St. Petersburg ranked sixth on the list, with 32 percent negative equity, and Miami came two spots in front of Sarasota, with the nation's 14th- worst negative equity rate of 28 percent.

Nationally, 9.1 million U.S. residential properties were seriously underwater, representing 17 percent of all properties with a mortgage.

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